3:19pm PT by Eriq Gardner
Relativity Bankruptcy: Viacom Objects to Sale of 'Catfish,' 'Fighter 2' Deals
With the clock ticking down to an auction early next month on the sale of Relativity assets, objections continue to pour in on the proposed assumption and assignment of contracts. The latest involves Catfish, one of MTV's biggest hits, as well as the sequel to The Fighter, the Oscar-nominated film distributed by Paramount Pictures.
Just in the past 24 hours, HBO, A&E Networks, Edward R. Pressman Film Corporation, Voltage Pictures, Verizon and about a dozen more companies have thrown their two cents into Relativity's Chapter 11, one of Hollywood's biggest ever bankruptcies.
A filing on Tuesday by Viacom provides a good example of how those with deals with Relativity are intervening at this late stage.
Viacom cites three reasons why its agreements can't be assumed by whomever emerges victorious in the bidding. First, it says that its consent is required with respect to personal services contracts. Second, it says that all existing monetary and non-monetary defaults must be cured before being assumed. And third, the prospective purchaser must provide adequate assurance they will be able to perform under the contract.
Relativity has a deal with Viacom for MTV's Catfish as well as two other shows, Truce and Invasion of Privacy, in development. These are being deemed to be personal service contracts because Relativity agreed to supply executive producing services of particular creatives.
According to Viacom, "Each of the Personal Services Agreements prohibits the Debtors from assigning it without Viacom’s prior written consent, and while generally such anti-assignment clauses are not recognized in bankruptcy, where unique, specified personal services are required, they are. In entering into each of the agreements, Viacom relied on the Debtors’ specialized producing skills and commitment to deliver the third party talent required to produce the programs."
As for monetary defaults, the biggest debt is said to be nearly $350,000 due for advertisements placed on Spike TV for the film Brick Mansions.
The request for adequate assurance of contractual performance is a standard objection, although in this case it could necessitate the three financial firms who have provided debtor financing and will be making a $250 million "stalking horse" bid to come forward with some more information. Says Viacom, "By way of example only, Viacom is entitled to know which individuals will be employed by the Stalking Horse Bidder to conduct the day-to-day operations of the Debtors, which individuals employed by the Stalking Horse Bidder have the necessary industry expertise to continue the television production business, and the status of contracts with third parties for the delivery of production and creative services to the Debtors."
For the same reasons, the potential bidders on Relativity's assets could be restrained to those already in the entertainment industry. Viacom says it is withholding its judgment on this.
Viacom also brings forward a limited objection to the sale of Relativity's assets with regards to The Fighter, starring Mark Wahlberg as boxer Micky Ward, and Fighter 2, a film project said to be development in Relativity court papers. According to the objection papers, Paramount has a perfected security interest in the right, title and interest to the two films, and Viacom doesn't want the contracts assigned "free and clear" of its interest.